Beginning course turning on the oilseed market?

Ölsaaten Cockpit, 07.05.2014

  • weather-related production and harvest risks
  • Urgency and pent up demand in the front dates
  • Expectations of a bumper crop on the oilseed market 2014/15
  • China's need for the time being saturated, steamed soybean meal demand due to falling poultry.

May 14

Aug 14

Oct 14

Dec 14

Palm oil (in $/ mt) Chicago





Rape (in € per mt) Paris




Nov 14: 357

Soybean meal (in €/ mt) Chicago





Highlights of 2014 oilseed prices exceeded - soy and palm oil prices give before direction and magnitude

After repeated attempts of a price correction in the oilseed market given the bumper harvests in the year 2014 , a price downward trend emerging currently.

The previous factor of the oversold US soya market loses strength. Soy bean and soy meal imports from Brazil bring relief in the tight supply situation. Increasing cancellations of exports to China to contribute also. China's temporary import ban given overfull warehouses is understood as signalling effect. And last but not least the speculative stock holders get cold feet and bring their hoarded quantities on the market. The growing low-cost supply from Brazil and Argentina assumes command at the helm of the price.

Movement is also in the palm oil sector as the second most important determining factor.  Producing previously fallen facing unexpectedly high season low growth steps above. Export however significantly decreases as a result of the economic-related slackening demand--especially from China and India -. The consequences are growing inventories in the main production areas of Malaysia and Indonesia, which are responsible for 90% of the world production.  The courses have already a considerable descent from their record just under $900 behind them. The $800 t becomes in the summer months without problems down border breached. The weather phenomenon El Nino is announced by the Australian meteorologists with a 70% probability. Malaysia and Indonesia will be affected. But the extent isn't predictable is possible impairment.

Yet one should not hope for a landslide-like correction of rates, because the shortages on the U.S. market is but relieved, but not fixed until the new harvest in the Sept/Oct 2014. In addition are the known uncertainties about the shipments from the South American loading stations. The expected large U.S. soybean crop includes several risks, with a currently feared delayed sowing starting up to the decisive phase of yield formation in August 2014. Open risk premia in the front courses have still their permission.

On the other hand, a considerable price decrease on the rear forward rates is to read. Magnitude of minus $50 per t compared to the may courses are clear signals of the market expectations in the case of canola and soybean meal.

Beginning course turning on the oilseed market?
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ZMP Live Expert Opinion

The supply-side drivers from the soy and palm oil sector control the future oilseed prices clearly down. The strong pull of demand from China has subsided some. Reasons are the lower economic growth and the reduced poultry out of fear before the dangerous H7N9 virus infection. The rare courses adapt the specifications of the two market leaders, soy and palm oil.

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